Aramco signed an MoU with a consortium of Indian companies to build a refinery at Ratnagiri. (Image source: IOCL)Energy consultancy Wood Mackenzie said Saudi Aramco's MoU to build the Ratnagiri refinery and petrochemicals complex would be a win-win for the state oil-giant and India

Indian minister of petroleum and natural gas, Dharmendra Pradhan, said on Wednesday that a consortium of Indian companies had signed an MoU with Saudi Aramco to build a refinery with an investment of about US$44bn.

Wood Mackenzie said that the deal would help India meet its rising oil and chemicals demand, even as it paves the way for Aramco to expand its refining capacity and diversify its portfolio with greater downstream assets.

The consultancy said in a report that India's oil demand, fuelled by growing incomes and population, would not be met by the capacity expansion that its state oil companies can manage over the same period.

It expects oil demand in the country to rise by 120,000bpd annually over the next five years, greater than the average 45,000bpd per annum capacity expansion from public-sector companies, which are hobbled by under-investment.

Further, Khalid Al-Falih, minister of energy, industry and mineral resources of Saudi Arabia, told reporters on Wednesday that Saudi's credit rating would help trim borrowing costs for the project.

For Aramco, which is looking to list a portion of its shares in the near future, the project would help the company diversify its portfolio with greater downstream assets, making it less vulnerable to oil price swings.

Aramco has cut a string of deals in recent years with Asian companies and could potentially take advantage of rising oil and chemicals demand in the region, which is witnessing a growth in population and energy consumption.